Lecture 8

Customs Procedure

Dr. Md. Shahidul Islam

Member, National Board of Revenue (NBR)
Cell: 01955555555
E-mail: [email protected]
Export Process
 Procedures for Export
• Exports are goods and services that are produced in one country and
sold to buyers in another. Export order is a document from any
specific foreign buyer to purchase items from the exporter
Main Export Items :
Export Process Flow chart :
Steps-1 : Goods readiness &
documentation :

Once the buyer accepts the offer and places an order, the exporter then
produces/collects goods to be exported.
When goods are ready and duly packed in Export worthy cases/cartons
(depending upon the mode of dispatch), the commercial Invoice is
prepared by the Exporter. If the number of packages is more than one, a
packing list is a must.
Steps – 2: Documents Lists :

Trade License
TIN Certificate
VAT Registration
Bank Account
Commercial invoice
Packing list
Export shipping Bill
Bill of lading
Certificate of origin
Letter of credit – if applicable
Insurance certificate
• Declaration of hazardous cargo – if applicable
• Export Registration Certificate (ERC).
• Issuance of Export Permit (EP).
• Export L/C; if there is no export L/C, Export Contract or Purchase Order or
Export Guarantee approved by the negotiating bank.
For some categories, product-wise additional certification/documents are
necessary for export :
1. ERC for jute, jute goods and tea.
2. Consignment wise export permit issued by the Bangladesh Tea Board for export of tea.
3. Approval of the Ministry of Industries in the case of export of Urea fertilizer produced in
all factories except KAFCO.
4. ‘No objection certificate’ from the Ministry of Information in the case of export of
entertainment programs, music, drama, films, documentary films etc. in the form of audio
cassettes, video cassettes, CDs, DVDs etc.
5. Utilization Declaration for export of RMG under bonded warehouse or Utilization
Permission for export of other goods under bonded warehouse.
6. Phytosanitary certificate for agricultural goods (such as vegetables, corns
etc.) as per the requirement of the country of export (issued by the Plant
Protection Wing of the Department of Agriculture Extension).

7. Quality control certificate in case of export of products for which such

certificate is obligatory (e.g. quality control certificate by the Department of
Fisheries is necessary as per the requirements of the country of destination for
frozen fish).

8. NOC from the CCI&E and Bangladesh Bank to allow exports on a

export-cum-import or returnable basis.

9. Bank guarantee equaling the value of goods to be exported on a

export-cum-import or returnable basis.
Steps-3 :Custom clearance :
Custom clearance is processed by the Clearing and Forwarding Agents
(C&F) authorized by the Customs and the shipment is usually processed
by the freight forwarders.
 Steps-4 : Submission of Declarations (BE) :
Exporter/ C&F Agent submits the export declaration (Bill of Export/Shipping Bill) and other
required documents to the Customs Authority through ASYCUDA World system.
ASYCUDA is a computerised customs management framework which covers most overseas
trade procedures. The framework handles manifests and customs declarations, accounting
procedures, and transit and suspense procedures. ASYCUDA accommodates Electronic Data
Interchange (EDI) amongst dealers and Customs utilising EDIFACT (Electronic Data
Interchange for Administration, Commerce and Transport) rules. The ASYCUDA programme
is coordinated at reforming the customs clearance process.
Steps-5 : Customs Checking of BE and documents :
In most of the cases, a Shipping Bill is processed by the system on the basis of declarations
made by the exporters without any human intervention. Sometimes the Shipping Bill is also
processed on screen by the Customs Officer.
Customs officers check the B/E submitted through Asycuda System along with other
documents submitted physically. When checking is completed , then Customs Officers issue
assessment notice throught Asycuda System. Exporter then completes payment by Bank
through digital system .
Steps-6 : Customs Examination of Export Goods:
Customs Officer may verify the quantity of the goods actually received and enter into the
system and thereafter mark the Electronic Shipping Bill (B/E) and also hand over all
original documents to the Dock Appraiser of the Dock who many assign a Customs
Officer for the examination and intimate the officers’ name and the packages to be
examined, if any, on the check list and return it to the exporter or his agent.

The Customs Officer may inspect/examine the shipment along with the Dock Appraiser.
The Customs Officer enters the examination report in the system. He then marks the
Electronic Bill along with all original documents and check list to the Dock Appraiser. If
the Dock Appraiser is satisfied that the particulars entered in the system conform to the
description given in the original documents and as seen in the physical examination, he
may proceed to allow "let export" for the shipment and inform the exporter or his agent.
Steps-7 : Loading of Goods in Ship/Cargo : :
Once the export declaration is approved by the Customs authority after documentary check
and physical verification of export consignments , C&F agents delivered the exporting goods
to exporter nominated Freight Forwarders Agent. Freight Forwarders arrange Shipping
lines/Airlines and loaded exporting goods into ships/airlines through container/cartons.
When arriving the Port, the C&F Agent/Freight Forwarder shows the gate pass with other
supporting documents to the Port Authority or Private off dock. The Customs office verifies
the submitted documents before the cargo allows to be loaded into a vessel/aircraft.
Steps-8 : The Process of Freight Forwarding :

The services provided by freight forwarders include the negotiation of

freight charges with the ocean carrier on behalf of the shipper, booking of
cargo space onboard ocean vessels, arranging cargo insurance, arranging
transport and labour, inland haulage of goods from the customer’s
warehouse to the port, temporary storage if necessary, cargo consolidation,
preparation of shipping and customs documentation, and export papers.
They may also be required to liaise with different government agencies
depending on the type of cargo that is to be exported, examples being
restricted items, certain types of food products, etc.
Freight forwarders should keep themselves abreast of laws, rules, and
regulations in the importing country as well. For this, they need to have a
good communication network with the government and other related
agencies of both the exporting and the importing countries.
Steps-9 : Generation of EGM (Bill of Lading):
Shipping Agent issues Export B/L after the cargo is loaded into a vessel/aircraft.
Export general Manifest (EGM) is submitted through ASYCUDA World system
after Export B/L is verified and the cargo loaded into vessel/aircraft at the
Port/Airport/Boarder by Master of Vessel for representative
Steps-10 : Completion of Export :
The export documents are filed with Exporting country customs electronically. The
cargo is moved from Exporters location to customs location where international
carriers are also operated. The export cargo is unloaded at Exporting country’s
customs bonded area under the control custodian of cargo. The handling of export
cargo at export port location is operated by such custodian in Exporting country.
 Asycuda World System

The UNCTAD Automated System for Customs Data (ASYCUDA) programme works to both
increase the effective collection of customs revenues and strengthen institutions for
customs data collection and processing in the countries where it operates, increasing
government revenues from trade and producing trade-related statistics through its
customs automation, modernization and reform projects. Given the programme’s
important function and the wide demand from member States for the services it
provides, it is no wonder that ASYCUDA is the largest UNCTAD technical assistance
programme, active in more than 90 countries.
The ASYCUDA programme is recognized worldwide for its contribution to the
modernization and automation of customs procedures.
Bill of Entry (B/E) :
The Prescribed Bill of Entry and Bill of Export Form Order, 2001 issued by the NBR outlines the
documentary submission requirements
Classification & HS Code
Basic Discussion
 Topics for discussion

• Objectives of Classification
• Classification: Basics & History
• Bangladesh Customs Tariff (BCT)
• General Interpretative Rules (GIR)
• Examples and Exercises on classification
• Feedback from the participants
 Classification, HS Code & BCT

Customs Classification: Particular category in

the Nomenclature in which a product is
classified or categorized.
The Harmonised Commodity Description &
Coding System (HS)
Harmonized System
 Topics for discussion

• Harmonized System: Background

• Detailed Discussion
• Importance
• Punctuation
 Classification

• There are 60 students in a class. Their marks in mathematics

examination:

Number Range No of Students

31-40 3
41-50 8
51-60 14
61-70 15
71-80 12
81-90 5
91-100 3
 Classification

Classification: The act of placing goods into the correct category.

Customs Classification: Particular category in the Nomenclature
in which a product is classified or categorized.
Tariff: A system of duties imposed by the government of a
country upon goods imported or exported.

how much duty is payable on imported or exported goods.

 HS Code & Convention
The Harmonised Commodity Description & Coding System (HS)
International system for classifying goods for trade

•Developed and maintained by the World Customs Organization (WCO)

•since 1988
•governed by an international convention [The International Convention on the
Harmonized Commodity Description and Coding System (HS Convention)]
 Uses of HS
•Uniform identification of goods
•For purposes of duty and tax collection
•Proper statistics of import and export
•Enforcement of national laws and international treaties
•Monitoring of controlled goods (wastes, narcotics etc.)
•International trade negotiations
•Customs risk management
 Harmonized System (HS)
The HS comprises
✹ Sections
✹ Chapters
✹ Headings
✹ Subheadings
✹ General Rules for the interpretation of the system (GIRs)
✹Legal notes (Section notes, Chapter notes)
 Structure of HS
21 Sections – broad range of goods
99 Chapters – narrow range of goods
Chapter 77 reserved for future use
98 & 99 reserved for National use
1244 Headings- more specific (4 digit)
Provide a more specific grouping of goods and
approximate description (terms of the heading)
5212 Subheadings (HS code): 6-digit code, very narrow range & specific
 Structure of HS
HS Code is 8 digit code (Bangladesh)
First 4 digits indicate heading
First 6 digits indicate sub-heading
In heading the first 2 digits indicate chapter
the latter 2 indicating the position of the heading in the Chapter.
In sub-heading the last 2 digits indicate position in the heading.
Country-Specific Digits: 7 to 10 (depends on countries)
✹Section VII Example of HS Code
PLASTICS AND ARTICLES THEREOF; RUBBER AND ARTICLES
THEREOF
✹Chapter 39 Plastics and articles thereof
✹Heading 39.24 Tableware, kitchenware, other household articles and hygienic or
toilet articles, of plastics.
Classification & HS Code
More about HS
Harmonized
System (HS)
► The Harmonized Commodity
Description and Coding System
(HS) is an internationally
standardized nomenclature
system for classifying goods (not
services) that are traded
internationally, maintained by
the World Customs Organization
(WCO).
 Different systems, different purpose, but
there are ways to connect them

Global

Different systems, different purpose, but there are ways to connect them
 Harmonized System (HS) was created
for International Trade
The HS is a top-down, hierarchical system. Goods must first be classified according
to their 4-digit heading, then 6-digit subheading, then 8-digit tariff rate subheading,
then 10-digit statistical subheading.

The idea behind HS was to have a common set of descriptive categories for goods
traded internationally. The system organizes goods into categories, down to the
6-digit level, are the same for all WCO member countries (internationally
harmonized).

Countries may add two digits to break the six digit subheadings into discrete subsets
for tariff purposes, and an additional two digits may be used for statistical purposes.
These 8- and 10-digit subheadings can differ country by country.
 HS Organization
Harmonized
System (HS)
Sections

Each Section consists Chapter (First 2 digits of the heading)

of Section Notes,
which define the scope
of the Chapters and Each Chapter consists Heading (4-digit Code)
headings within the of Chapter Notes, and
Organized in: Section. It is a grouping the codes and
Subheading (6-digit
descriptions of The first two digits of
of a number of Code)
commodities which the HS Code indicate
Chapters which
are generally related the Chapter while the Country-specific breakdown
codifies a particular Each Heading can be (8 or 10-digit Code)
to the title of the latter two digits
class of commodities. subdivided into
Chapter. indicate the position of
further subheadings
the Heading in the
where necessary.
SECTIONS Chapter. Countries often set
their customs duties at
the 8-digit level.
CHAPTERS Statistical suffixes are
often added to the
8-digit tariff code for a
HEADINGS total of 10 digits.

SUB HEADINGS
COUNTRY SPECIFIC
BREAKDOWN

INTERNATIONAL LEVEL DOMESTIC LEVEL

HS Product Distribution

Goods are organized according to additional value-added features. Raw

materials and unprocessed goods can be found in the earlier chapters. Finished
goods can be found in the later chapters.

The same principle applies within each of the chapters.

 HS – Where is it used?

EXPORTE IMPORTE
Seller
R International
transportation
R Local
transportation

Domestic transportation Buyer

Exporting Importing

INTERNATIONAL BORDER
country country customs
customs

ORIGIN
DESTINATION
 HS: Stage of Processing or Manufacture

Section I Section VIII Section XII

 HS: Stage of Processing or Manufacture

❖Paper Pulp Chapter 47

❖Paper- Chapter 48
❖Books- Chapter 49
 Punctuation

Understanding the use of punctuation in the Customs Tariff (Tariff) is

essential for determining the correct classification of goods.
❖ Comma (,)
❖ Colon (:)
❖ Semi-colon (;)
❖ And
❖ Or
❖ Other
 Comma (,)

❑To denote a series or list of commodities that are classified under the same
Tariff provision.
❑“Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens,” are
all classified under heading 08.04.
❑The comma may also be used to set apart descriptors which limit the
classification of a particular commodity.
❑Heading 07.04 “Cabbages, cauliflowers, kohlrabi, kale and similar edible
brassicas, fresh or chilled.”
❑These items must be in either fresh or chilled condition and cannot be in
other condition like not frozen or cooked.
 Colon (:)
The colon indicates that there is additional information to
follow that is part of the description of the goods classified
under the Tariff provision.
- It means that the product being described at one level is
further divided at the next level down by some
characteristics:
- (a) material,
- (b) capacity,
- (c) functions etc.
 Semi colon (;)

•A semi-colon in a Tariff Item indicates a full stop

•The portions of the Tariff Item divided by a semi-colon are
separate and distinct from each other.
•Example heading 84.21 (page: 280):
Centrifuges, including centrifugal dryers; filtering or
purifying machinery and apparatus, for liquids or gases.
•This description refers to two separate product groups
centrifuges and filtering or purifying machinery and
apparatus.
The qualifying phrase, including centrifugal dryers refers
only to the first product group
whereas the qualifying phrase for liquids or gases refers
only to the second
 Semi colon (;)

•Example heading 49.07 (page: 171):

Unused postage, revenue or similar stamps of current or new
issue in the country in which they have, or will have, a recognized
face value; stamp impressed paper; banknotes; cheque forms;
stock, share or bond certificates and similar documents of title
• The heading contains five classes of goods.
• The phrase “unused” is only for the first type of goods.
•The goods mentioned in other clauses do not need to be unused.
 Some Important Words: And/or

The word 'And' is used in the same way as a comma, to connect items in a
series which are all to be included together.
•Heading 08.08 Apples, pears and quinces (Apples, pears, quinces)
•'And' may also be used when there is more than one condition to fulfill.
Example: Footwear with outer soles of leather and uppers of canvas.
This means that the footwear must satisfy both conditions in order to be
classified here.
•The word 'Or' is used to show that alternatives exist.
•Example: Heading 73.20, Springs and leaves for springs, of iron or steel,
•Heading 02.01 Meat of bovine animals, fresh or chilled.
 Some Important Words: Other

•At each level of the Tariff, the product in question is divided

into groups.
•Typically, the first few groups on a given level are described
specifically, with products that don't fit into any of these groups
put into an Other category.
•Example: the Heading 73.20
 Classification & HS Code
BCT- Bangladesh Customs Tariff
 Topics for Discussion

• BCT: Legal Status

• Structures
• Sections of BCT
• Section and Chapter Notes
• Rate of Duty
Customs act, BCT and Budget
BCT and budget
Table of Contents
 Sections of BCT

•SECTION I: LIVE ANIMALS; ANIMAL PRODUCTS

•SECTION II: VEGETABLE PRODUCTS
•SECTION III: ANIMAL, VEGETABLE OR MICROBIAL FATS AND
OILS AND THEIR CLEAVAGE PRODUCTS; PREPARED EDIBLE
FATS; ANIMAL OR VEGETABLE WAXES
•SECTION IV: PREPARED FOODSTUFFS; BEVERAGES, SPIRITS
AND VINEGAR; TOBACCO AND MANUFACTURED TOBACCO
SUBSTITUTES; PRODUCTS, WHETHER OR NOT CONTAINING
NICOTINE, INTENDED FOR INHALATION WITHOUT
COMBUSTION; OTHER NICOTINE CONTAINING PRODUCTS
INTENDED FOR THE INTAKE OF NICOTINE INTO THE HUMAN
BODY
 Sections of BCT (contd.)
•SECTION V: MINERAL PRODUCTS
•SECTION VI: PRODUCTS OF THE CHEMICAL OR
ALLIED INDUSTRIES
•SECTION VII: PLASTICS AND ARTICLES THEREOF;
RUBBER AND ARTICLES THEREOF
•SECTION VIII: RAW HIDES AND SKINS, LEATHER,
FURSKINS AND ARTICLES THEREOF; SADDLERY
AND HARNESS; TRAVEL GOODS, HANDBAGS AND
SIMILAR CONTAINERS; ARTICLES OF ANIMAL GUT
(OTHER THAN SILK-WORM GUT)
•SECTION IX: WOOD AND ARTICLES OF WOOD;
WOOD CHARCOAL; CORK AND ARTICLES OF CORK;
MANUFACTURES OF STRAW, OF ESPARTO OR OF
 Sections of BCT (contd.)
•SECTION X: PULP OF WOOD OR OF OTHER FIBROUS
CELLULOSIC MATERIAL; RECOVERED (WASTE AND
SCRAP) PAPER OR PAPERBOARD; PAPER AND
PAPERBOARD AND ARTICLES THEREOF
•SECTION XI: TEXTILES AND TEXTILE ARTICLES
•SECTION XII: FOOTWEAR, HEADGEAR, UMBRELLAS,
SUN UMBRELLAS, WALKING-STICKS, SEAT-STICKS,
WHIPS, RIDING-CROPS AND PARTS THEREOF;
PREPARED FEATHERS AND ARTICLES MADE
THEREWITH; ARTIFICIAL FLOWERS; ARTICLES OF
HUMAN HAIR
•SECTION XIII: ARTICLES OF STONE, PLASTER,
CEMENT, ASBESTOS, MICA OR SIMILAR MATERIALS;
 Sections of BCT (contd.)
•SECTION XIV: NATURAL OR CULTURED PEARLS,
PRECIOUS OR SEMI-PRECIOUS STONES, PRECIOUS
METALS, METALS CLAD WITH PRECIOUS METAL
AND ARTICLES THEREOF; IMITATION JEWELLERY;
COIN
•SECTION XV: BASE METALS AND ARTICLES OF BASE
METAL
•SECTION XVI: MACHINERY AND MECHANICAL
APPLIANCES; ELECTRICAL EQUIPMENT; PARTS
THEREOF; SOUND RECORDERS AND REPRODUCERS,
TELEVISION IMAGE AND SOUND RECORDERS AND
REPRODUCERS, AND PARTS AND ACCESSORIES OF
 Sections of BCT (contd.)

•SECTION XVIII: OPTICAL, PHOTOGRAPHIC,

CINEMATOGRAPHIC, MEASURING, CHECKING, PRECISION,
MEDICAL OR SURGICAL INSTRUMENTS AND APPARATUS;
CLOCKS AND WATCHES; MUSICAL INSTRUMENTS;
•SECTION XIX: ARMS AND AMMUNITION; PARTS AND
ACCESSORIES THEREOF
•SECTION XX: MISCELLANEOUS MANUFACTURED ARTICLES
•SECTION XXI: WORKS OF ART, COLLECTORS' PIECES AND
ANTIQUES
 SECTION NOTES

A commodity can be classified either by:

•Terms of the Heading
•Notes to the Sections,
•Chapters or Subheadings
•The General Interpretative Rules (GRI)
•The Legal Notes which appear in front of most Sections are
known as Section Notes which has a legal force to determine
HS code.
 SECTION NOTES

The Legal Notes for each Section provide:

•Define the limits of a Heading.

•Provide lists of goods included in a particular Section.

•Provide lists of goods excluded from a particular Section.

•Direct the user to the appropriate Section

 Rate of Duty

•BCT shows the rate at which import duty is imposed on imported or

exported goods as per section 18 of the Customs Act, 1969.
•Statutory rate of import duty: Column 5
•Statutory rate of export duty: Column 6
•Section 19: General exemption
•Section 20: Special exemption
•Ad Valorem and Specific Duty
 Statistical Unit

•Statistical unit in BCT is incorporated to maintain uniformity and

convenience in processing trade and other statistical data.
•Quantities: quoted, declared, recorded and maintained in that unit
•Weight: kg, Carat
•Length: meters
•Area: square meter
•Volume: cubic meter / litre
•Electrical power: 1,000 kilowatt hours
•Number (units): piece/items (u), pairs (2u), dozens (12u), thousands
of piece/items (1,000u)
 Classification & HS Code
General Rules of Interpretation (GRI)
 Topics for discussion

• GRI: What and Importance

• Six Rules
• Examples and Exercises
General Interpretative Rules (GIR)
General Interpretative Rules (GIR)
 General Interpretative Rules (GIR)

❖There are 6 General Rules

❖The first five rules relate to the 4-digit headings
❖Rule 6 relates to classification in subheadings
❖The rules set out the principles for classification in the HS
❖They provide for uniform application of the nomenclature
❖They are an integral part of the Nomenclature
 GIR 1

The titles of Sections, Chapters and sub-Chapters are

provided for ease of reference only; for legal purposes,
classification shall be determined according to the terms of
the headings and any relative Section or Chapter Notes and,
provided such headings or Notes do not otherwise require.
 GIR 1: Main Points

❖The titles of Sections, Chapters or Sub-Chapters are provided

for ease of reference only (no legal value).
❖Legal classification at heading level must be made according
to:
(a) the terms of headings (the wording) and any
relative Section or Chapter Notes; and
(b) only if the headings or Notes do not otherwise require,
according to Rules 2 to 5.
 GIR 1 & Classification

GIR 1 fully resolves the heading classification when:

❖there is only one heading whose terms encompass the whole
good; or
❖The terms or Notes direct the classification to a specific
heading; or
❖the terms or Notes direct the method of classification
GIR 1 (example)
 Rule 2 (A): incomplete/ unfinished/
unassembled/ disassembled

(a) Any reference in a heading to an article shall be taken to include a

reference to that article incomplete or unfinished, provided that, as
presented, the incomplete or unfinished article has the essential character
of the complete or finished article. It shall also be taken to include a
reference to that article complete or finished (or falling to be classified as
complete or finished by virtue of this Rule), presented unassembled or
disassembled..
 GIR 2

•GIR 2 is different in that is does NOT direct the classification

of goods.
••GIR 2 (a) and GIR 2 (b) only extend the scope of
classifications to allow incomplete, unfinished, unassembled,
disassembled, mixed, combined and multi-material goods
coverage.
•GIR 2 does not direct which, if any, of the classifications
opened by GIR 2 should be used.
•GIR 2 is used with GIR 1 or with GIR 1 and 3
 Essential Character

•The “essential character” provision is aimed at separating goods that have

acquired the essential character of the final good from parts or assemblies of
parts.
•The essential character test (also used in GIR 3 (b)) is one of the most legally
challenging aspects of classification.
•The factor determining the essential character will vary as between different
kinds of goods.
•The Explanatory Notes mention:
•nature of the material,
•nature of the component,
•bulk,
•quantity,
•weight or value,
•role of a constituent material in relation to use of the goods.
Example:
In which heading (4-digit) would
you classify a bicycle without
handles?
Example
Example
 Rule 2 (b): Mixtures and combinations

Any reference in a heading to a material or a substance shall be taken to include a

reference to:
• such material or substance not mixed or combined
• mixtures of that material or substance with other materials or substances
• combinations of that material or substance with other materials or substances
Iron and Steel (Iron and carbon)
Copper and Bronze (copper and tin)
Any reference to goods of a given material or substance shall be taken to include a
reference to goods consisting:
• wholly of such material or substance
• partly of such material or substance
Note 1 (a) to Section XVI – articles (…) of vulcanized rubber
other than hard rubber
Combination of rubber with other material, where the rubber
gives the whole its essential character
 Rule 2 (b): Mixtures and combinations

Remember: Rule 1 (Governing Rule)

(If the heading, chapter notes and section notes do not otherwise
requires)
15.03: Lard stearin, lard oil, ……, not emulsified or mixed or
otherwise prepared (15.16-15.18)
17.02: sugar syrups not containing added flavoring or
coloring matter
Not applicable when changes the character of goods of the kind
mentioned in the heading
(Distilled water vs IV fluid)
Rule 3: Classification of goods classifiable
under
two or more headings
Deciding Rule
When goods are classifiable under two or more headings
3 (a) The heading which provides the most specific description of the
goods is to be preferred to a heading which provides a more general
description.
• A description by name is more specific than a description by class
(name vs class)
• Pipe, nuts, bolts, springs vs articles of iron or steel
 Rule 3: Most specific description

There is no definition of “most specific” in the Nomenclature. The

Explanatory Notes (ENs) give some limited guidance.
Generally accepted principles in practice:
•a description by name is taken as more specific than a description by class
•a description which more narrowly defines the goods or which is covers
more of the goods characteristics is generally taken as more specific than a
broader description or one which covers fewer characteristics.
 Classification by description
Shaver/ Hair clipper with self-contained motor
84.67 Tools for working in the hand, pneumatic,
hydraulic or with self-contained
electric/non-electric motor.

85.09 Electro-mechanical domestic appliances,

with self-contained electric motor, other than
vacuum cleaners of heading 85.08.

85.10 Shavers, hair clippers and hair-removing

appliances, with self-contained electric
motor.
Rule 3: Classification of goods classifiable
under
two or Not
more headings
applicable:
(1) When two or more heading each refer to part only (mixed or
composite goods)
(2) Part only for items put up in retail sale
• Consists of at least two different articles of different headings

• Products to meet a particular need / activity

• Sale directly to end users without repacking

 Rule 3: Classification of goods classifiable
under
two
Rule 3 (b): Applicable or more headings
for:
(1) Mixtures
(2) Composite goods of different materials
(3) Composite goods of different components
(4) Goods put up in retail sale
Different component of composite goods can be attached together
(inseparable)
Can also be separable components (complementary and normally
not sale separately)
As if they consisted of material or component which gives them
their essential character.
Rule 3: Classification of goods classifiable
under
two or more headings
Essential character
BULK

QUALITY

QUANTITY

WEIGHT

VALUE
 Mixtures

•Sodium Chloride or salt (25.01) with Calcium Chloride and

Magnesium Chloride (28.27)
•Chocolate coated wafer (19.05.32, not in 18.06)
 Rule 3(c): Last numerical order

When goods cannot be classified by reference to 3(a) or 3(b), they shall be

classified under the heading which occurs last in numerical order
among those which equally merit consideration.

Only used when GIR 3 (a) and (b) cannot be used.

Remember: “those which equally merit consideration”

 Rule 3(c): Last Numerical Order
Consider a pair of gloves made of leather and
textiles.
Most of the palm, the lower side of the fingers
and almost all of the thumb and index
finger are of leather. Everything else is
textile.
There are headings for leather gloves and textile
gloves.
Each of these covers only part of the materials
so under GIR 3 (a) are equally specific.
As composite goods, they can be classified under
GIR 3 (b), but does the leather or textile
give the essential character?
 Rule 3(c): Last Numerical Order

A mixture of Rye (10.02) and Burley (10.03)

50/50
Character determining part cannot be investigated.
No heading describes such mixture
 THE GIR 3 (c)

Video reproducer Projector

Heading 85.28 (occurs last in numerical order)

by application of GIR 3 (c) 90
 Rule 4

Goods which cannot be classified in accordance with the above Rules

shall be classified under the heading appropriate to the goods to which
they are most akin.
having similar qualities (alike, close)

Only used when:

✹there is no heading which is able to cover the goods through its terms or
notes (GIR 1); and
✹GIR 2 is not able to expand references to allow coverage of the goods.
✹Requires a “most akin” test
 Rule 4

Very rarely applied

Classification according to kinship
Developed to accommodate new products for which no
provision in the HS
 Rule 5(a)

Camera cases, musical instrument cases, gun cases, drawing instrument

cases, necklace cases and similar containers, specially shaped or fitted to
contain a specific article or set of articles, suitable for long-term use and
presented with the articles for which they are intended, shall be classified
with such articles when of a kind normally sold therewith.
This Rule does not, however, apply to containers which give the whole
its essential character.
 Rule 5(a): Important points
The containers must be presented with the goods (the goods
do not have to be in the container)

The container must be shaped or fitted to contain the article

or set of articles it is presented with

The container must be suitable for long-term use, so of a

similar durability to the goods

The container must be of a kind normally sold with the goods

it is presented with
Rule 5(a): Examples
 Rule 5(a): not applicable

►Is the case specially shaped or fitted to contain the camera?

→ Yes
►Is the case suitable for long-term use? Yes
► Is the case presented with the camera for which it is intended? → Yes
►Is the case of a kind normally sold together with the camera?
→ No
►Does the case give the whole the essential character? → Yes
 Rule 5(a): not applicable

The pure gold camera case is not of a kind normally presented with digital
cameras, and it also gives the whole the essential character
The digital camera is classified in heading 85.25 by application of GIR 1
(terms of the heading
The golden camera case itself is an article to be classified in heading 71.15, by
application of GIR 1
(Note 3 (B) to Chapter 42 and
Note 1 (b) to Chapter 71).
 Rule 5(b)

Subject to the provisions of Rule 5(a), packing materials and

packing containers presented with the goods therein shall be
classified with the goods if they are of a kind normally used for
packing such goods.

However, when such packing materials or containers are clearly

this provision is not binding suitable for repetitive use.
 Example

Biscuits are classified in heading 19.05 in accordance with GIR 1.

Carton of corrugated paperboard is classified in heading 48.19 in
accordance with GIR 1.

Whether the carton is to be classified together with the biscuits, we should

consider whether the carton meets the criteria set out under GIR 5(b) which
stipulates how to deal with packing materials/ containers
 Rule 5(b): Important Points

The packing materials or packing containers must contain the

goods when presented at the border
The packing materials or containers are of a kind normally
used to pack the type of goods they contain
For packing materials or packing containers that are suitable
for reuse for international trade, countries can choose
whether or not to apply GIR 5 (b)
 Rule 6

► The classification of goods in the subheadings of a heading shall be

determined according to the terms of those subheadings and any related
Subheading Notes and, mutatis mutandis, on the understanding that only
subheadings at the same level are comparable.
► For the purposes of this Rule the relative Section and Chapter Notes
also apply, unless the context otherwise requires.
 Rule 6: Example

How to classify protective clothing of

rubber for surgeons ?
40.15 Articles of apparel and clothing
accessories (including gloves, mittens
and mitts), for all purposes, of
vulcanised rubber other than hard
rubber
4015.1 - Gloves :
4015.11 - - Surgical
4015.19 - - Other
4015.90 - Other

Within a single heading, the choice of a one-dash subheading may

be made only on the basis of texts of competing one-dash
subheadings.
 Rule 6: Important Points

► Classification at subheading level is based on the terms of the

subheadings and related Subheading Notes
►GIRs 1 to 5 can be used with the required changes, e.g. changing heading
to subheading
►Each level of subheadings is considered separately, that is all the five digit
subheadings that fall under the chosen heading are examined first,
without consideration of any six digit subheadings
 GIR and BCT

►The Explanatory Notes and Alphabetical Index to HS

published time to time by the WCO shall be treated as the
explanation of this schedule in case of determining the
classification of goods.
Customs Valuation
 Customs Valuation

Customs valuation is a customs procedure applied to determine

the customs value of imported goods. If the rate of duty is ad
valorem, the customs value is essential to determine the duty to
be paid on an imported goods. Therefore, the valuation
procedure applied in any country plays an important role in
determining duties and taxes of imported goods by its Customs
Department.

Customs valuation practice has been made uniform across the

world through the adoption of Article VII of the General
Agreement on Tariffs and Trade (GATT) 1994, more commonly
known as the WTO Agreement on Customs Valuation or the
GATT Valuation Code.
 GATT Valuation
The Agreement makes ‘transaction value’ as the basis for customs valuation.
According to the GATT Valuation Code, transaction value of the imported goods
is the price actually paid or payable for the goods when sold for export to the
country of importation, with certain adjustments.

The General Agreement on Tariffs and Trade (GATT) is a legal agreement

between many countries, whose overall purpose was to promote international
trade by reducing or eliminating trade barriers such as tariffs or quotas.
According to its preamble, its purpose was the "substantial reduction of tariffs
and other trade barriers and the elimination of preferences, on a reciprocal and
mutually advantageous basis."

Bangladesh, as a member of the World Trade Organization, adopted

the Agreement on Customs Valuation, and accordingly follow the
transaction value concept for its customs valuation purposes.
Bangladesh has amended the Customs Act to accommodate GATT
provisions (section 25 of the Customs Act).
 Section 25 of the Customs Act, 1969

Section 25 of the Customs Act, 1969 stipules that ‘the actual price,
that is, the price actually paid or payable, or the nearest ascertainable
equivalent of such price, at which such or like goods are ordinarily
sold, or offered for sale, for delivery at the time and place of
importation or exportation, as the case may be, in course of
international trade under fully competitive conditions, where the seller
and the buyer have no interest in the business of each other and the
price is the sole consideration for sale or offer for sale shall be the
value for customs assessment purpose’. This is basically the
transaction value of the goods. The essence of transaction value is
that, except in specified circumstances, customs value will be based
on the actual price of the goods, which will generally be shown on the
commercial invoice.
The Customs Valuation (Determination of
Value for Imported Goods) Rules, 2000.
Methods and principles of determining customs valuation as
elaborated in the GATT Valuation Code have been incorporated into
Bangladesh Customs regulations through an SRO
57-Law/2000/1821/Cus date 23/2/2000. It is also known as The
Customs Valuation (Determination of Value for Imported Goods)
Rules, 2000.
In situations where Customs value cannot be determined on the basis
of the transaction value or where the transaction value is not
acceptable as the customs value because the price has been distorted
as a result of certain conditions, Customs value will be determined
using one of the following methods in hierarchical order: Methods and
principles of determining customs valuation as elaborated in the GATT
Valuation Code have been incorporated into Bangladesh Customs
regulations through an SRO 57-Law/2000/1821/Cus date 23/2/2000.
It is also known as The Customs Valuation (Determination of Value for
Imported Goods) Rules, 2000.
 Methods of Valuation

In situations where Customs value cannot be determined on the basis

of the transaction value or where the transaction value is not
acceptable as the customs value because the price has been distorted
as a result of certain conditions, Customs value will be determined
using one of the following methods in hierarchical order:

∙ The transaction value of identical goods

∙ The transaction value of similar goods
∙ The deductive value method
∙ The computed value method
∙ The fallback method
 GATT Article VII

Value for customs purposes of imported merchandise should be based

on its actual value or of like merchandise; Value should not be based
on value of merchandise of national origin or on arbitrary or fictitious
values; “Actual value”-price at which such or like merchandise is sold
in the ordinary course of trade under fully competitive condition; it
should include any abnormal discount or other reduction from the
ordinary competitive price;
The standard of “fully competitive conditions” permits to exclude from
consideration prices involving special discounts limited to exclusive
agents; A contracting party can determine the value for customs
purposes uniformly on one of the two basis: (1) on the basis of a
particular exporter’s price of the imported merchandise, or (2) on the
basis of general price level of like merchandise.
 Meaning of Transaction Value
Article 1 defines transaction value as price actually paid or payable for the goods
when sold for export to the country of importation (for example, invoice price).
Transaction value would prevail as the basis of assessment even for sale between
related parties if relationship has not influenced the price.
(a) Costs incurred by buyer, but not included in the price: commission and
brokerage, except buying commission; cost of containers; cost of packing.

(b) Goods and services supplied by buyer free or at reduced price: materials,
components; tools, dyes, molds for production of imported goods; consumables;
engineering development, art work, design work undertaken elsewhere than in
country of importation.

(c) Royalties and license fees related to goods being valued when paid as a
condition for sale.

(d) The value of proceeds of any resale accruing to seller.

(e) Certain countries including India add the following to TV: costs of transport;
insurance; loading, unloading and handling at the port of importation.
 Five other methods of determining value

Where the declared transaction value is rejected,

five other methods of valuation have to be applied
sequentially. They are:
1. Transaction value of identical goods (Article 2)
2. Transaction value of similar goods (Article 3)
3. Deductive value (Article 5)
4. Computed value (Article 6)
5. Fall-back method (Article 7)
Transaction value of identical goods
& Transaction value of similar goods
Transaction value of identical goods
Value should be determined on the basis of already determined
transaction value for identical goods. Identical goods are similar in all
respects including physical characteristics, quality and reputation.
Transaction value of similar goods
Where the test of value of identical goods fails, value should be
determined on the basis of transaction value of similar goods. Similar
goods are those which, although not alike in all respects, have like
characteristics and like component materials. They perform the same
functions and are commercially interchangeable.
 Some common principles for using
identical/ similar goods valuation method

The time element- “at or about the same time as the

goods being valued” “Same commercial level” and
“Substantially the same quantity level” Adjustment
be made for different commercial/quantity level If
more than one TV available, take the lowest value.
The goods be produced in the same country as the
goods being valued and preferably by the same
person.
 Deductive Value

This is to be applied where the test of value of identical or similar goods fails.
This value is to be determined on the basis of the unit sales price of goods of
same class or kind in the domestic market of the imported goods (or of
identical or similar goods) sold to unrelated buyers in the greatest aggregate
quantity Suitable deductions should be made for elements like commissions,
profits, duties and taxes, transport and insurance and other general expenses
related to sales in the country of importation.

Time element-be sold “at or about the time of importation of goods being
valued” and failing that earliest date of sale after importation of goods being
valued, but before expiry of 90 days after importation “Goods of same class or
kind”-goods imported from the same country as the one being valued or from
other countries Where goods not sold in the condition as imported, but after
further processing-value would be sale price of processed goods after making
allowance for value added in such processing
 Computed Value & Fall-back Method
Computed Value
This is to be applied where the earlier stated methods of valuation fail.
This value is determined by taking into account cost of production plus
usual amount of profit and general expenses incurred in sale of goods
of same class or kind. Other elements of cost as required in Article 8
(transport, insurance, loading/unloading charges)Normally to be used
for related party transactions.

Fall-back Method
Value can be determined by using any of the four methods described
above in a flexible manner consistent with provisions of this Agreement
and GATT Article VII. Prohibitions-value cannot be determined on the
basis of selling price of domestically produced goods in country of
import; price of goods in domestic market of country of export; price of
goods for export to a country other than country of importation;
minimum customs values; arbitrary or fictitious values.
Thank You!